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BGF realises majority of its shareholding in M Squared

BGF News 11.23.2020

BGF has realised the majority of its existing shareholding in M Squared, the photonics and quantum technology developer, crystalising an excellent return. BGF will continue to retain a meaningful stake going forward.

BGF has invested £6.4m across three rounds of funding to support M Squared’s pioneering work in quantum innovation and technologies to help tackle climate change. The business has grown 10-fold since the first invested in 2012.

M Squared is now at the forefront of UK efforts to commercialise revolutionary quantum technology – considered a major component of central government’s commitment to research and development and its future industrial strategy.

To support the next stage of its growth, M-Squared has announced £32.5m in new financing as it expands its backers to include a £20m debt facility from Santander and £12.5m from the newly formed Scottish National Investment Bank, in its first ever investment.

The new investment has been used to fund the acquisition of the substantial part of BGF’s current shareholding and will fuel the next stage in business and technological growth. BGF will continue to support the company through a retained but reduced equity shareholding.

M Squared’s innovations are addressing global scientific and technology challenges in fields as diverse as climate change, healthcare, quantum computing and virtual reality. Earlier this year, M Squared announced it is leading the UK’s largest industry-led commercial quantum computing project as part of an Innovate UK Challenge fund, DISCOVERY. M Squared has also received investment as part of the project Square – meaning that total investment has reached £50m in the year to date despite the Covid-19 pandemic.

Dr Graeme Malcolm OBE, Founder & CEO of M Squared, said:

“M Squared makes the world’s purest light – technology that has transformative, real-world, applications that can take on the climate emergency, greatly improve biomedical imaging, realise the next evolution of semiconductors, and now truly unlock the coming quantum age.

“Scotland is at the heart of the UK’s advanced science and technology sectors and sitting alongside world-leading universities and commercial partners – it has become a critical hub of excellence from which we can continue expanding globally.

“Our commercial and technological potential is enormous and with this transaction we have the ideal financial and structural platform to progress and realise substantial growth and launch major new developments. We are delighted to now be working with both Santander and the Scottish National Investment Bank, alongside continued support from BGF, on funding a shared mission to innovate and scale.”

Patrick Graham Head of BGF for Central Scotland and Northern Ireland said:

“M Squared, one of BGF’s first investments, received £6.4m across three rounds of funding over the course of the past 8 years. The company has grown ten-fold since, crystalising a strong return for BGF. Our long-term view on investment and supporting growth via follow-on funding can provide a strong platform for businesses like M Squared to realise their full potential. Our flexible model also allows us to collaborate with other institutions and we are delighted to be partnering with both Santander and the SNIB in its first investment. We are also delighted to continue to be a shareholder in M Squared and look forward to continuing to support management and the business for the next phase of its growth journey.”

M Squared’s strategic stakeholders including Scottish Enterprise, the University of Strathclyde and the University of St Andrews were highly supportive of this new funding development which represents one of Scotland’s most ambitious funding projects this year and will further help Glasgow gain recognition as a global location for quantum and many other advanced technologies.